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VPS hosting is a Virtual Private Server, and is a virtualized server. A VPS hosting environment mimics a dedicated server within a shared hosting environment. It is technically both shared hosting and dedicated hosting. Virtual Private Server hosting plans offer virtual machines to clients. The concept of virtualization is similar to shared hosting where one server computer can have multiple sites running on it. However, virtualization technology allows each account to be treated as its own machine with its own dedicated resources and operating system. Also the cost of a VPS is lower but the performance is equivalent to a dedicated server.

A virtual private server (VPS) is a virtual server that appears to the user as dedicated server, but that is actually installed on a computer serving multiple websites. A single computer can have several VPSs, each one with its own operating system (OS) that runs the hosting software for a particular user.
VPS mainly works by abstracting resources on a physical server and provides access to customer to an emulated server called virtual machine (VM). Each virtual machine runs on a particular operation system and have restriction from accessing to the physical server’s compute, memory and resources.
One of the main advantages of the VPS is that the user has full access to VPS’s operating system, with unrestricted root or administrator permissions. VPS also allows the user to host multiple websites. VPS enables the user to install any kind of software that is capable of running on that operating system.

VPSs are commonly used by smaller organizations that want the flexibility of a dedicated server, but without the cost. The primary disadvantage to using VPS is its lack of performance. The user has to face security patches in VPS sometimes.
Some of the top-vendors which provide VPS are GoDaddy, Liquid web, Bullten and HostGator.
VPS is offered with 10 Mbit/s, 100 Mbit/s or 1000 Mbit/s (with some as high as 10Gbit/s). This means that the customer is theoretically able to use ~3 TB on 10 Mbit/s or up to ~300 TB on a 1000 Mbit/s line per month, although in practice the values will be significantly less.
With the evolution of virtualization software and technology, a large number of companies are offering virtual private server hosting at a reasonable cost. Hosting is either unmanaged or unmetered, in which case the user is responsible for managing and monitoring the server and can transfer an unlimited amount of data on a fixed bandwidth line.